What’s Driving International Gains For Indian Airlines? – India Report

Skift Take

There has been a surge in international travel among Indians. powered by increase in spending power. Indian airlines, to serve this growth in demand, are expanding their operations.

Indian airlines will account for half of the country’s international passenger traffic by the 2027-28 financial year, according to a report by credit rating agency CRISIL Ratings. That’s up from 43% this fiscal year, with India’s international passenger traffic at around 70 million.

What’s driving the growth? According to Manish Gupta, senior director at CRISIL, there has been a noticeable shift in spending patterns post-Covid. He said there is an increasing inclination of Indians towards international leisure travel. Skift Megatrends also noted that the spending power of the Indian middle class is likely to significantly impact the growth of the global travel industry. 

Gupta said, “Increasing disposable incomes, easing visa requirements, growing number of airports, and enhanced air travel connectivity are boosting international travel. The government’s focus on making India a hub for tourism is also expected to provide a fillip to inbound traffic.” According to him, this is likely to lead the international passenger traffic to annually grow at 10-11% over the next four years versus 5% pre-pandemic. 

How are Indian carriers responding? Speaking at the Skift India Summit, Air India CEO Campbell Wilson said that the carrier, which had already placed an order for 470 aircraft, is taking a new aircraft every six days. 

India’s largest carrier IndiGo, which recently placed its first-ever order for widebody aircraft, plans to offer nonstop connectivity from major Indian airports to global destinations.

The Indian aviation minister had also urged domestic carriers to fly long haul and help establish new hubs.

CRISIL highlights several factors that are playing in favor of Indian airlines.

  • Expanding network: Indian airlines are expanding their international network extensively. Over the past 15 months, domestic carriers have added 55 new international routes, taking their tally beyond 300, CRISIL said.

    “These include direct flights originating from additional cities to popular long-haul destinations in the United States, Europe and Australia, effectively reducing flying time and eliminating layovers,” it added. Recently, Air India has announced flights to Zurich, and additional direct flights between Delhi and Phuket, while new budget carrier Akasa Air has commenced international operations by flying to Doha, Qatar.

  • Codeshare agreements: Indian airlines are entering into codeshare agreements with major international airlines as an effective measure for network expansion. IndiGo has been using this strategy extensively and recently entered into codeshare agreement with Malaysia Airlines. Air India also entered into a codeshare agreement with Japanese carrier All Nippon Airways recently.
  • Wider domestic connectivity: Indian airlines’ superior domestic connectivity is also lending a helpful hand in them getting a larger share of the international traffic in the country.

    International airlines only serve select cities, thus domestic airlines’ connectivity to tier-2 and 3 cities allows them to provide travelers in these regions with end-to-end international connectivity on a single ticket, CRISIL said.

  • Geographical location: The ratings agency said, “India’s geographic location also lends itself well to air connections between the EMEA and Asia Pacific regions, potentially positioning the country as a hub for international travel.”

    This is in line with the views of IndiGo chairman V Sumantran, who had said that India is becoming a convenient hub for travel between Southeast Asia and the Middle East.

The ratings agency highlights several factors that are playing in favor of the domestic airlines.The ratings agency highlights several factors that are playing in favor of the domestic airlines.
India’s international passenger traffic has increased to around 70 million in fiscal 2024.

Hotel Industry Sees Surge in Hiring

The hospitality and tourism industry has witnessed a surge in hiring in April 2024, according to a report by job search platform Naukri.com. The strong momentum in the tourism sector led to a 16% growth in hiring as compared to April 2023. There has been a high demand for positions such as front office managers, housekeeping supervisors, and food and beverage service professionals, especially in urban hubs like Delhi, Mumbai and Bangalore. 

“While the overall Index is flat, the new financial year is off to a positive start with remarkable hiring growth recorded in hospitality,” said Naukri.com chief business officer Pawan Goyal. 

The Indian hospitality industry is witnessing a significant expansion in the country. Marriott International has recently opened its 150th property in India. Indian Hotels Company (IHCL) has more than 90 hotels in its pipeline. Sarovar Hotels, which is among the fastest-growing Indian hotel chains, also has a pipeline of 70 to 80 hotels. 

Etihad to Start Flying to Jaipur Soon

In June, United Arab Emirates’ flag carrier Etihad Airways is set to commence operations to Jaipur in Rajasthan. The airline is unveiling its latest network expansion at the Arabian Travel Market 2024. 

Starting June 16, Etihad will fly four times a week between Abu Dhabi and Jaipur. With this, its network would expand to 11 destinations across India. 

Since last year’s event, the airline has added to its network daily flights from Abu Dhabi to Kozhikode and Thiruvananthapuram in Kerala. As part of its summer plans, Etihad is also increasing its frequency to Thiruvananthapuram, by adding three weekly flights. 

South Africa Increases Focus on Smaller Indian Cities

South Africa Tourism is increasing its focus on the potential in tier-2 and 3 cities in India. Preparing for a leisure travel trade show, the country will host an Indian contingent consisting mostly of participants from smaller Indian cities. 

“India stands as a strategic market for South African Tourism,” said Middle East, India, and Southeast Asia hub head Neliswa Nkani. “We see a massive opportunity in India’s tier 2 and teir 3 cities. These territories hold ample promise— a new generation of eager travellers seeking unique experiences,” she added.

South Africa is expecting 100,000 tourists from India in 2024, hoping to surpass the pre-Covid levels of 95,000 Indian travelers. Last year, the African nation saw nearly 80,000 visitors from India.

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